Page:Harvard Law Review Volume 32.djvu/542

5o6 HARVARD LAW REVIEW company on land or under franchises originally held by the mort- gaging company,^ further complicate the situation. The uncer- tainty of the scope of an after-acquired clause, when the mortgag- ing company has transferred its assets, therefore, is the greatest limitation upon its effectiveness; yet, in the cases discussed before, the courts seem to have ignored that difficulty. The engineering problems involved in segregating a imified prop- erty so as ta ascertain the extent of the conflicting liens, and the difficulty of tearing the property apart in order to give each class of lien-holders their strict rights — if equity will so do — can scarcely be exaggerated. The necessity of this has been recog- nized by the Supreme Court of the United States^ where the court held that this controversy as to priority of liens should be transferred from the property to the equitable fund received from the sale of the properties. Yet a new company, as a banking problem, cannot be organized effectively if its ownership is to be the subject of litigation. Such a question as this offers minority bondholders a chance to keep the property in litigation for years. The technical legal rights of dissenting overlying bondholders, if carefully examined, appear well-nigh unassailable. A reorganiza- tion plan, establishing a compromise delimitation of the extent of each mortgage lien, approved by the majority of the bondholders of each class, could always be forced upon the minority if the court refused to fix an upset price. A minority bondholder would not be inclined to Utigate over the apportionment of an equitable fund if that fund be so small as to make his share insignificant. He would prefer to abide by the reorganization plan. And since it is difficult to conceive of any constitutional right in a minority bondholder to have an upset price fixed, and since he can share with the majority on an equal footing, such procedure would be a happy means of preventing litigation, and thereby facihtating a reorganization. Otherwise, if a minority bondholder has'^a right to have an adequate upset price fixed, he can insist upon having the property for which the price is to be fixed ascertained, and that means a heyday of Htigation. <5 See Toledo, Delphos & Burlington R. R. Co. v. Hamilton, 134 U. S. 296, 297 (1890). « First National Bank of Cleveland v. Shedd, 121 U. S. 74, 85 (1887). J